Maintain long positions. The HSIF extended higher on bullish sentiment, rising 115 pts to settle at 28,591 pts. It gapped 69 pts lower last Friday to open at 28,397 pts – climbing to the 28,675-pt day high before falling towards the 28,313-pt day low. It closed at 28,591 pts. During the evening session, the bulls were seen profit taking, and the index retraced to a 28,383-pt session low before last trading at 28,493 pts. Since 4 Jan, the HSIF has been moving higher on a steep uptrend. We decided to move the stop loss higher to trail this uptrend. We will lock in profitable trade if it falls below the stop-loss level. As the index is trading far apart from the 20-day SMA line, chances of a downward correction has increased recently. As long as the stop loss remains intact, we keep to our positive trading bias.

We recommend traders maintain long positions. We initiated these at 26,943 pts, or the closing level of 30 Dec 2020. For risk-management purposes and profit protection, the trailing stop is set at 28,168 pts.

The immediate support is marked at 14 Jan’s low of 28,168 pts, followed by 12 Jan’s low of 27,757 pts. On the upside, the immediate resistance is pegged at 28,686 pts, with the next hurdle at 28,896 pts.

Source: RHB Securities Research - 18 Jan 2021